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Ten years ago, it was too easy a credit that put the financial markets on their knees. Today, it could be a $ 247 trillion global debt that would cause the next crash.
After a decade of over-indebtedness of US households due to low wages and the national debt that more than doubled in the same period, to $ 21 trillion, the debt could soon curb this economic recovery, warn analysts.
"We believe the major economies are about to experience the worst recession we've seen in the last 10 years," said Murray Gunn, head of global research at Elliott Wave International.
And in a note, he added: [US] The economy is starting to contract and our analysis suggests that high nominal debt rates will instantly become a very big problem. "
Economic statistics:
- US household debt of $ 13.3 trillion now exceeds the 2008 peak. This is partly due to mortgage lending, which is close to $ 9 trillion, a level that was not reached ten years ago. years.
- Outstanding student loans jumped from $ 611 billion in 2008 to about $ 1.5 trillion today.
- Auto loans, at nearly $ 1.25 trillion, exceeded the 2008 total, while credit card balances are as high as before the Great Recession.
Meanwhile, global debt – a consequence of low-cost flooding by central banks – is $ 247 billion, up from $ 177 trillion in 2008. That's almost twice / twice the size of the world economy. .
"We can not call it a recession, it will be worse than the Great Depression," economic commentator Peter Schiff said, predicting a major economic slowdown by the end of the first term of the Trump presidency. "The US economy is much worse than it was ten years ago."
Economic theorists say that insurmountable debt is the big kahuna. The huge sums of today have certainly fueled the times of prosperity. Economists say that, given that it eventually needs to be repaid, the tipping point will come when a wave of overdue borrower defaults – potentially dampened by rising interest rates – will lead to a generalized reduction in spending and debt. income.
Although Schiff erred in the past – he falsely predicted that the US Federal Reserve would fail in its quantitative easing drive to "mirror" housing and equities as a result of the financial crisis – it is convinced that he is right this time.
"I think we are going to have a dollar crisis – you think the Turkish lira seems bad now, wait to see the dollar implode and we have a sovereign debt crisis in the United States," he said. The Post. "The US government will have the choice between a debt default or massive inflation."
Earlier this year, Goldman Sachs said the fiscal outlook for the US was "not good" and could threaten the country's economic security during the next recession.
Schiff rejects the latest batch of positive indicators, including the lowest unemployment rate in a generation, growing business confidence prompted by President Trump's tax cuts and the Dow's record highs. "Obviously, there is a lot of optimism – but there is a good chance that the US economy will be in recession for the next two years. It's already the second-longest economic expansion in history, "said Schiff, adding that recent declines in housing starts and car sales could be signals of attack.
Gunn sees a brutal deflationary spiral in the next crisis.
"People will turn to the central banks for help, but the authorities will be in need," Gunn warned.
"Our prediction is that central banks will go from the announcement of" saving the world "in 2008 to defamation for their helplessness in the face of the upcoming deflationary crash.
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